1. Which statement is not true regarding the conservatism convention in accounting?

a) Conservatism is sometimes used to defend poor accounting judgments.

b) Conservatism guides us to choose the approach that leads to lower assets or higher liabilities.

c) Conservatism means we only record that of which we are 100% certain.

d) Conservatism strives to ensure that business risks and uncertainties are adequately reflected in the financial statements.

2. Which of the following is not considered an unusual or infrequently occurring item on an income statement?

Multiple Choice

a) Operating income or loss from discontinued operations.

b) Corporate restructuring charges.

c) Foreign currency transaction gains and losses.

d) Gains and losses from sales of investments.